“The Company May Never Return to Profitability”, Said Overland

In a Form 10-Q SEC filing published on May 13, Overland Storage wrote:

• "The Company has incurred losses for the last three fiscal years and negative cash flows for the last two fiscal years. As of March 31, 2009, the Company had an accumulated deficit of $66.3 million. During the first nine months of fiscal 2009, the Company incurred a net loss of $15.4 million and the Company’s cash balance declined by $5.9 million from the aggregate cash, cash equivalents and short-term investments balance of $9.7 million at June 30, 2008.

• "The Company’s recurring losses from operations, negative cash flows, accumulated deficit and need for additional financing raise substantial doubt about its ability to continue as a going concern.

• "The Company may never return to profitability, or, if it does, the Company may not be able to sustain profitability on a quarterly or annual basis.

• "Historically, magnetic tape has been used for all forms of data backup and recovery because magnetic tape was, and still is, the most cost-effective, ‘removable,’ high capacity storage media that can be taken off-site to ensure that data is safeguarded in case of disaster. For a number of years, we have held a market-leading position in mid-range tape automation with our flagship NEO products, and sales of tape automation appliances have represented more than 63.0% of our revenue for each of the last three fiscal years. Revenue from tape automation appliances represented 51.5% and 64.2% of total net revenue during the first nine months of fiscal years 2009 and 2008, respectively. Although we expect that tape solutions will continue to be the anchor of the data protection strategy at most companies, tape backup is time consuming and often unreliable and inefficient. The process of recovering data from tape is also time consuming and inefficient. We expect that tape will eventually be relegated to an archival role for infrequently accessed data, and that companies will increasingly focus more on disk-based solutions."